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Opinion: GOP tax reform proposals a disaster for Jersey homeowners

November 18th, 2017 by

What is the proposed GOP tax reform impact on New Jersey homeowners?

Opinion: GOP tax reform proposals a disaster for Jersey homeowners

Anybody in New Jersey’s middle class whose personal strategy for saving is to buy a home is watching that strategy be run over by a truck – a truck being driven by Congress.  If the Senate has its way, the new tax code will prevent homeowners from deducting their property taxes from their federal taxes, a financial disaster for the average homeowner.

The House proposal that passed Thursday – a clear example of the lesser of two evils still being evil – will allow property tax deductions but only up to $10,000.  A $10,000 cap may benefit some homeowners, but when your state has the highest property taxes in the nation, there will be many more hurt than helped.

The vast majority of the consumer wealth in the New Jersey middle class is tied-up in their house. People buy a home believing that they’ll have equity in it to sell and retire, or even to borrow against to pay their kids’ college tuition. A home is the biggest investment 99 percent of people in New Jersey make in their lives. If the Senate bill passes, not only will homeowners’ equity disappear overnight, but there will be a significant jump in the number of home foreclosures in the area.

To stay afloat of the property, people will be forced to either dip into their savings or to take money that was allocated for some other purpose, such as retirement funds, children’s college tuition, medical coverage, etc.  Or they will have to give up their home.  Many will opt for foreclosure believing that the other choices are unacceptable.

The House tax bill isn’t much better an option when you consider the number of New Jersey homeowners who pay more than $10,000 per year in property taxes.  According to the New Jersey Department of Community Affairs, in 2016 there were more than 140 New Jersey municipalities whose Average Residential Property Taxes was more than $10,000.  More than 30 towns had an average property tax of $15,000 or higher.

Why does Congress assume these homeowners have a money tree in their backyards?  Assuming a homeowner is financially solvent because their property is worth $15,000 in taxes is ridiculous, and the housing market may suffer the consequences.  Many homeowners will feel cheated.  They will look at this tax deduction limit and say, “This is not the deal I signed on for when I bought this home.  I never would have bought it had I known this was going to happen.  I am not paying this.  Let them come and take my home.”

And when foreclosures again dominate the housing market and new home construction falls even further because homeowners are unable to carry the cost of owning a new home, then Congress will respond as it always does by blaming everyone but themselves.

New Jersey homeowners would be wise to swarm the offices and phone lines of their senators and demand that these tax reform proposals be rejected.  Wealthier Americans who hold diversified wealth will not be adversely affected by these proposed changes, but middle-class Americans like those in New Jersey have limited personal wealth and most of it is invested in their homes.  They cannot absorb the proposed changes.  Prepare for a disaster.

Arbitration keeps consumers in the dark

November 9th, 2017 by

GOP doesn’t like regulating banks. Consumer protection courts?

A different story | Opinion

 

By Joshua Denbeaux

Vice President Mike Pence cast the deciding tie-breaking vote in the Senate on Oct. 24 to defeat legislation that would have prevented financial institutions from having to face a courtroom when charged with fraud against a consumer.

Republicans and Corporate America argue that eliminating arbitration will merely enrich lawyers through class-action lawsuits and deliver few monetary benefits to consumers, but the real argument is that they fear that their constituents – the lending industry – will face a jury.

They will argue that the legislation was merely the latest attempt by the Consumer Financial Protection Bureau — the “rogue agency” in the words of Senate Majority Whip John Cornyn, R-Texas — to strangle the business community with excessive regulations. Actually, that is not the case.  Don’t believe the smoke and mirrors.  The truth is Corporate America and their Republican lapdogs saved arbitration because its furtive decision process leaves consumers in the dark and make banks and lending institutions richer.

Arbitration decisions are not published; therefore, the dispute is made secretive. The arbitrator’s results are shared only with the two parties.  Court decisions are different.  When a case is settled a document is created by the court summarizing the decision.  And although not all decisions are published, thanks to the internet everything is available to the public — both published and unpublished material.

Why does the availability of court decisions matter?

When a court or a judge decides on a matter and a written document is produced, other judges can examine that decision and consider whether it applies to the case at hand.  Even if the decision is not published and therefore not precedential, it is still recognized as an important judicial decision that future judges can review and use as a basis to render their decisions.

Arbitration would seem of little value to anyone except for the two disputants. Since decisions are not published or made available, customers and their legal representatives have no idea how similar disputes have been resolved by previous arbitrators — but the banks do.

Each time a consumer enters an arbitration he/she is forced to start at the beginning of a dispute, regardless of the number of times previous arbitrators may have already sided with other consumers on similar issues.

And because corporations are continually facing arbitrators as the defense in financial disputes, they are privy to all the previous arbitrator decisions. Because the consumer is a single plaintiff facing an arbitrator for the first time, he or she is blind to how similar cases have been decided.

This unfairly adds to the difficulty of the consumer proving mistreatment.

And there is one other victim of mandatory arbitrations besides the person bringing the actual complaint: the Consumer, with a capital C.  Meaning, You.  And Me.  And your Neighbor.  And your best friend, and the weird guy who walks his dog at 4:15 every morning, and the guy at the deli who gives you coffee every morning. Meaning, all of us.

Each time a court decision is rendered the legal issue under examination gets narrowed and better-understood by the legal community — courts, attorneys, and so on — the greater understanding results in precedence, eliminating the need to re-litigate the same issue.

As U.S. Sen. Sherrod Brown, D-Ohio, succinctly put it, “. . . hard-working Americans benefit when they get their day in court.”

Republicans insist that the Free Market be left alone,”Let the market correct itself.  Regulations make matters worse,” they say.

It’s time for Republicans to follow their own advice and apply it to financials disputes.  Let the courts and juries correct financial discretions. Regulating the courts is worse than regulating business.  So cut it out.

But let’s face it, there’s too much money to be made by keeping consumers in the dark through arbitration.

Joshua Denbeaux is a partner at Denbeaux & Denbeaux in Westwood, where he focuses on financial rights for consumers and business owners, specializing in real estate disputes such as foreclosure and loan servicing.